Conflicts and Solutions in EPC Projects

Abstract

The use of Engineering, Procurement and Construction (EPC) projects has gained popularity in the provision of large-scale infrastructure and industrial project because of the single point accountability arrangement, and time-saving schedule goals. Nevertheless, EPC contracts often get hit with conflict situations which cripple cooperation, cause cost overruns, project delays, lawsuits and poor stakeholder relations. This paper will research the major causes of conflict in EPC projects and discuss the efficiency of resolution measures used in alleviating their effects on the performance of project delivery. The frequency of claims, length of disputes, volumes of change orders, and rate of delay recovery were analyzed using descriptive statistics. Qualitative data were examined in terms of themes, to find out the patterns of escalation, communication failures, and effectiveness of conflict resolution. The results suggest that scope ambiguity, change in design, schedule constraints, payment delays and incorrect clauses in risk transfer are some of the key conflict drivers. Under cultures of adversarial contract and a lack of well coordinated channels of communicating with the stakeholders, conflicts are compounded. Group settlement processes like early dispute resolution boards, integrated project management workshop, mediation and hybrid partnering contractual strategies proved to be more effective compared to the traditional arbitration and litigation channels. The research adds value to the existing EPC project management literature by providing empirically based taxonomy of conflict types and conflict resolution strategies, as well as recommending governance reforms that would promote cooperative risk sharing, open communication structures, and formulated early intervention strategies to increase project stability and delivery performance of EPC projects.